Segmentation

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Segmentation

  1. 1. Segmentation <ul><li>Divide a market into separate groups </li></ul><ul><li>Tailor a marketing strategy for each group based on ….. </li></ul><ul><li>…” demand differential” </li></ul><ul><li>Segmentation Developmental Stages </li></ul><ul><ul><li>Mass Markets </li></ul></ul><ul><ul><li>Product Differentiation </li></ul></ul><ul><ul><li>Target Marketing </li></ul></ul>
  2. 2. Segmentation <ul><li>Buyer Preference Patterns </li></ul><ul><li> descriptive, not normative </li></ul><ul><ul><li>homogeneous preference </li></ul></ul><ul><ul><li>diffused preference </li></ul></ul><ul><ul><li>clustered preference </li></ul></ul>
  3. 3. creaminess sweetness Homogeneous Preference -no natural segments -all buyers have same preference
  4. 4. creaminess sweetness Diffused Preference -no pattern (…or poor research) -take center position
  5. 5. creaminess sweetness Clustered Preference -natural segments -increases as number of competitors increases
  6. 6. Segmentation <ul><li>Market Coverage Strategies: </li></ul><ul><ul><li>undifferentiated marketing </li></ul></ul><ul><ul><ul><li>market aggregation </li></ul></ul></ul><ul><ul><ul><li>one strategy for entire market </li></ul></ul></ul><ul><ul><ul><li>opposite of segmentation </li></ul></ul></ul>
  7. 7. Segmentation <ul><li>Market Coverage Strategies (cont.) </li></ul><ul><ul><li>differentiated marketing </li></ul></ul><ul><ul><ul><li>different marketing strategies for multiple segments </li></ul></ul></ul><ul><ul><ul><li>increased penetration into each segment </li></ul></ul></ul><ul><ul><ul><li>higher sales and higher costs </li></ul></ul></ul>
  8. 8. Segmentation <ul><li>Market Coverage Strategies (cont.) </li></ul><ul><ul><li>concentrated marketing </li></ul></ul><ul><ul><ul><li>target a small market </li></ul></ul></ul><ul><ul><ul><li>go after a large share </li></ul></ul></ul><ul><ul><ul><li>small firm survival strategy </li></ul></ul></ul>
  9. 9. Segmentation <ul><li>Surrogate (or segmentation) Variables: </li></ul><ul><ul><li>Customer Characteristics </li></ul></ul><ul><ul><ul><li>State of Being </li></ul></ul></ul><ul><ul><ul><ul><li>Demographic </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Geographic </li></ul></ul></ul></ul><ul><ul><ul><li>State of Mind </li></ul></ul></ul><ul><ul><ul><ul><li>Psychographics </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Perceptions, Preferences </li></ul></ul></ul></ul>
  10. 10. Segmentation <ul><li>Surrogate Variables (cont.) </li></ul><ul><ul><li>Customer Response </li></ul></ul><ul><ul><ul><li>Product Usage </li></ul></ul></ul><ul><ul><ul><ul><li>Volume </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Loyalty </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Market Factors </li></ul></ul></ul></ul><ul><ul><ul><li>Benefit Received </li></ul></ul></ul>
  11. 11. Segmentation <ul><li>Why segment? </li></ul><ul><ul><li>Identifies opportunities and needs. </li></ul></ul><ul><ul><li>Allows firm to focus on specific needs. </li></ul></ul><ul><ul><li>Improves marketing mix for each segment. </li></ul></ul><ul><ul><li>Allows small firm to exist. </li></ul></ul>
  12. 12. Segmentation Strategy <ul><li>Determine Demand Patterns </li></ul><ul><li>Establish Possible Bases of </li></ul><ul><li>Segmentation </li></ul><ul><li>Identify Potential Market Segments </li></ul><ul><li>Choose a Target Market Approach </li></ul><ul><li>Select the Target Market(s) </li></ul><ul><li>Position the Firm’s Offering in </li></ul><ul><li>Relation to the Competition </li></ul><ul><li>Develop the Appropriate Marketing </li></ul><ul><li>Mix(es) </li></ul>Analyze Consumer Demand Target the Market Develop the Marketing Strategy
  13. 13. Segmentation <ul><li>Requirements to Segment: </li></ul><ul><ul><li>Sizeable (substantial in Text) </li></ul></ul><ul><ul><ul><li>in terms of dollars </li></ul></ul></ul><ul><ul><li>Identifiable (measurable plus differentiable in Text) </li></ul></ul><ul><ul><ul><li>surrogate variables exist </li></ul></ul></ul><ul><ul><li>Reachable (accessible plus actionable in Text) </li></ul></ul><ul><ul><ul><li>by a marketing strategy </li></ul></ul></ul>
  14. 14. Segmentation <ul><li>K-Mart Theory </li></ul>

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